JAKARTA • The outlook for interest rates in South-east Asia's two biggest economies is upward even after mixed inflation data yesterday.
In Thailand, rising food and energy costs boosted inflation to 1.6 per cent last month, the highest in almost four years, adding to the case for the Bank of Thailand to deliver its first rate hike since 2011.
The policy rate of 1.5 per cent is now below inflation, making the economy only the second one in South-east Asia, alongside the Philippines, to have a negative real interest rate.
Separately, data showed consumer-price growth in Indonesia was little changed at 3.2 per cent last month.
While that is well within Bank Indonesia's (BI) 2.5 per cent to 4.5 per cent target band and should offer some respite to policymakers, the rupiah's slide to a two-decade low against the dollar will put pressure on the central bank to hike rates for a fifth time this year.
Nomura Holdings economist Euben Paracuelles sees both central banks hiking rates this year.
Inflation is not the "main driver of BI's policy decisions at the moment", and he said the subdued figures do not change his forecast of another increase at the September policy meeting.
Nomura's base case is also for a 25 basis-point increase in the Bank of Thailand's policy rate on Sept 19, although recent comments from the bank's governor Veerathai Santiprabhob have lowered the probability.
Mr Veerathai said in an interview on Saturday that the central bank does not face immediate pressure to tighten monetary policy like other emerging-market peers.
Indonesia's rupiah has slumped more than 8 per cent against the dollar this year, while the Thai baht is down 0.4 per cent.